Wednesday, November 12, 2008

The End of the Arms Trade

In http://andreswhy.blogspot.com “Financial Crisis 2008 : Exchange Rates. The Arms-Trade “ it was noted without proof that this crisis means the end of the arms-trade .

Why ?

Credit is the life-blood of the arms-industry .

There can be no trust . Payment has to up-front in cash (small fry) or guaranteed by large financial houses . But this credit has now dried up .

The inhibition of recovery in the arms-trade results from the strict international credit controls being formulated and implemented as we speak . Being international , it will be much more difficult to circumvent than the old “end-user licence” protocols .

But , more important , under Social-Capitalism , the long-term costs of messes like the DRC for the short-term gains of a few interested parties , is contra-productive .

It is extremely ironical to note that the entire industry is Collateral Damage .

Sovereign States .US , Britain , France , Russia , China and India are the largest arms-dealers , using third-world countries as entropy-dumps to offset some of their costs . Most of their arms-deals would not pass even a cursory creditcard-check . They ignored each other’s transgressions in the past .

But now the whole credit business is bound up in much larger concerns . Now it will pay them to watch each other like hawks to see that no one gets an illicit advantage .The system has shifted into a new attractor basin .

An unintended consequence will be the enhancement of the Military-Industrial Complex . The loss of minor income from the sale of obsolete equipment will be more than compensated for by the great increase in monitoring credit-compliance , which will be necessitated by the new international protocols . No state will trust each other . There will be huge scope for International Security Firms (our old Military-Industrial Complex in a new guise .) Ecological compliance will be thrown in for good measure.

Short-term consequences .At first ammunition and spares , then arms gets more expensive , then unobtainable . Bandit-groups and “on-spec” revolutionists will get increasingly desperate . They must attack and win immediately , or perish . So there will be surge of violence . Like in the DRC now . All sides are feeling the pinch as ammunition is drying up .

What about the huge stockpiles of AK47’s and ammunition ? Gone . The ex-USSR stockpiles were all dumped into the third-world during the 1990’s . The present supply are newly manufactured , subject to the credit provisos .

An example :In a Reuters report dated 12/11/2008 the Russian Deputy Prime Minister of Defence (Sergei Ivanov) stated that Russian arms manufacturers are experiencing cash-flow problems . The liquidity crunch left some unable to meet payrolls or contracts .They will need loans from state banks .

This is happening to all arms manufacturers . A highly risk-averse credit system will not deal with manufacturers who sell to the risky retail trade .

Note the “disarmament” in the 1930’s depression . Companies with state-contracts (like Hurricanes , Spitfires) survived . But many others did not . This appeared on statistics like a disarmament .

But it was only a concentration on quality .

In the 1990’s it was the USSR only in the crunch . Now it is the whole world . They might be desperate to sell , but there is no credit . And no stockpiles . Manufacturing costs will have to met from credit .

The whole system is reacting differently .

Organised CrimeThey have the skills . But there are other factors .

See in http://andreswhy.blogspot.com “Money : Human Growth rates”Beth(-1) can be described as Fear-Command economies .Growth rate is less than 0.8%Feudalism and Organized Crime can be described as Beth(-1) .

The only ones that do survive for a time are ones that use bubble-technology . They let a group bubble up , create wealth , then conquer them . But this has to be finely judged . Sooner or later they make a mistake , and the bubble takes them .

In any case , Organised Crime is highly unstable , since they can make more money by going legitimate (the bubble subsumes them) . Their normal growth rate is pitiful (all that control and squashing of initiative eats up profit)

But it flourishes in Beth(0) societies , where the growth rate is not much higher .South Africa is a good example .

Feudalism is more like Pure Socialism . The Aristocracy is the State , and everybody works for them . But they can’t compete against societies with a higher growth-rate (ie beth(n>0) ) . Cf Sparta and Athens , Incas and Spaniards , USSR and US .